The U.S. Department of Justice can take over management of troubled Oregon mega-dairy Lost Valley Farm, a bankruptcy judge ruled Wednesday.

Owner Greg te Velde also will lose control of his two California dairies – GJ te Velde Dairy in Tipton and Pacific Rim Dairy in Corcoran.

“Te Velde is unwilling, or unable, to comply with his duties as a fiduciary,” Judge Fredrick Clement wrote in his decision.

“Since filing (bankruptcy), he has continued his long-standing habits of methamphetamine usage and gambling,” Clement wrote. “Drug usage has occurred once or twice per week, and he has gambled estate monies of $2,000-$7,000 monthly. Te Velde borrowed $205,000 without court authorization, and in a one-month period took personal draws of $28,000 more than authorized.”

Greg te Velde’s Lost Valley Farm, Oregon’s second-largest dairy, on Sunday, March 18, 2018. The dairy moved to a new property in 2017, which came with rights to Columbia River water. However, that water can only be used for crop irrigation in the summer months. MOLLY J. SMITH / Statesman Journal

Greg te Velde’s Lost Valley Farm, Oregon’s second-largest dairy, on Sunday, March 18, 2018. The dairy opened a year ago without necessary permits for the nearly 1 million gallons of water per day that it uses; it used a loophole in Oregon law to pull water from an underground aquifer that’s been off limits to new wells for over 40 years. MOLLY J. SMITH / Statesman Journal

Greg te Velde’s Lost Valley Farm, Oregon’s second-largest dairy, on Sunday, March 18, 2018. The dairy, which plans to expand up to 30,000 cows, has had continuing issues with violating its wastewater permit and obtaining water rights. MOLLY J. SMITH / Statesman Journal

Greg te Velde’s Lost Valley Farm, Oregon’s second-largest dairy, on Sunday, March 18, 2018. The dairy opened a year ago without necessary permits for the nearly 1 million gallons of water per day that it uses; it used a loophole in Oregon law to pull water from an underground aquifer that’s been off limits to new wells for over 40 years. MOLLY J. SMITH / Statesman Journal

Greg te Velde’s Lost Valley Farm, Oregon’s second-largest dairy, on Sunday, March 18, 2018. The dairy opened a year ago without necessary permits for the nearly 1 million gallons of water per day that it uses; it used a loophole in Oregon law to pull water from an underground aquifer that’s been off limits to new wells for over 40 years. MOLLY J. SMITH / Statesman Journal

Greg te Velde’s Lost Valley Farm, Oregon’s second-largest dairy, on Sunday, March 18, 2018. The dairy moved to a new property in 2017, which came with rights to Columbia River water. However, that water can only be used for crop irrigation in the summer months. MOLLY J. SMITH / Statesman Journal

In February 2018, the Oregon Department of Agriculture sued to shut the dairy down, saying it was endangering nearby drinking water wells by repeatedly allowing liquid manure and wastewater to overflow storage lagoons.

In March, the state agreed to a stipulated judgment that allowed the dairy to continue operating in a limited capacity until it could prove that its wastewater treatment system was fully functional.

Last month, a Multnomah County judge declared te Velde in contempt of court for violating that agreement. The judge gave him until Oct. 5 to bring manure releases under control.

Meanwhile, the Department of Agriculture revoked the dairy’s wastewater permit. But te Velde has appealed, which could drag the process out for months if not years.

Department of Agriculture officials did not respond to requests for an interview Thursday.

It's uncertain whether replacing te Velde with a trustee will hasten or slow environmental improvements at the dairy.

Creditors have said they are reluctant to approve any spending on environmental compliance until a consultant completes a report outlining the cost of all needed improvements.

It's also unclear whether the Oregon court can still hold te Velde responsible for meeting the Oct. 5 deadline in his contempt case.

"The Lost Valley mega-dairy has been a disaster from the beginning, and hopefully this decision will lead to it finally being closed down," said Ivan Maluski, policy director for Friends of Family Farmers, which has opposed the dairy since it was proposed

"The Oregon Departments of Environmental Quality and Agriculture could have prevented this fiasco and should have denied this operation a permit at the outset," said Ivan Maluski, policy director for Friends of Family Farmers, which has opposed the dairy since it was proposed. "This situation makes it clear that Oregon needs stronger laws to prevent this kind of thing from happening in the future."

Te Velde also is facing criminal charges in California for felony meth possession and trying to bribe a police officer following an incident at a casino earlier this year. The case is scheduled for a pretrial conference hearing September 18.

Tillamook officials did not respond to a request for an interview. The company is continuing to buy milk from the dairy.

Contact the reporter at tloew@statesmanjournal.com, 503-399-6779 or follow at Twitter.com/Tracy_Loew